As government support for non-profit institutions decreases, institutions are looking more to individuals and corporations for financial support. More than two thirds of all U.S. households make charitable donations. Americans gave an estimated $120 billion in voluntary contributions in 1996. Of this amount, about $70 billion was donated for religious purposes, $18 billion for education, and $26 billion for health and human services.
Non-profit organizations have limited resources with which to develop contributions, and it is cost effective for them to spend those resources developing large donors. Although recognition of donors is known to be an important factor in encouraging repeat donations, small donors are often not given the attention and recognition that is necessary to encourage repeat donations. Because lower income donors tend to contribute a larger proportion of their income to charities than do higher income individuals, small donors can be a significant source of income for nonprofit organizations.
Even large donors often do not obtain the recognition they seek from nonprofit institutions to which they contribute. To many donors, public recognition of their donation is important. Corporate donors, in particular, may want the public to know of their gifts to the community. Also, donors that donate in honor or memory of a person or an event want their donation to be promptly and publicly recognized.
Donor recognition should be immediate and public and should correctly reflect how the donors wish to be acknowledged. Many organizations recognize donors quarterly or once a year in newsletter publications. Thus, donors may have to wait months to receive formal, public recognition of their donation. This may discourage repeat giving.
Because of the infrequent publication of donor recognition lists and the limited accessibility of the public to organizational newsletters, potential donors do not receive the kind of recognition that encourages original and repeat donations. Moreover, with the delay between the gift and the publication, a busy organization can make mistakes in acknowledging the donation as the donor requested.